HOMEBUILDING HIBERNATION ENDS

This was the headline of the Orange County Register on Sunday May 22nd.  The entire real estate section was focused on all the housing developments that are picking up steam by most So Cal builders.  The California division president of Fieldstone communities delivered the following quote, "It makes sense (to build) again.  We can deliver a product where there's demand.”  This column has been emphasizing for a few months, that the lapse in building over this fairly prolonged period of time, will result in heavy pressure on the resale market.  That's good for homeowners who have hung in there, despite the odds, and have stayed current on payments and are riding out this temporary loss of equity.  Why do I say temporary?  Let's look at investments for the last ten years.  There is not enough space here to do a comparison chart, but do your own.  Take a look at the S & P 500, the Dow Jones, Nasdaq, and Real Estate.  Let's see which one, held from 2000 to 2010 (the worst decade, all agree, in real estate) and see which investment fared best.  The short cut answer: real estate.  Also, with that investment, you managed to leverage your money and buy something somewhere between 10 X's and 5 X's your investment, depending on your down payment.  You more than likely fixed your housing cost, unlike renting, and if you didn't use your home like an ATM, you have built equity.  Let's not forget one of the best tax breaks for the middle class, interest deduction.  Buying real estate doesn't sound so bad... No wonder they're building again.  All agree building has been in the tank.  This column has reported how low permits and percentages have been off.  So after nearly 2 years of a blank in the building department, 28 developments have started the building process in one way or another.  According to Irvine-based housing consultant John Burns, "builders are coming out of hibernation."  The projects together include approximately 3,000 homes and townhouses and duplexes.  Compare that to the paltry 1,600 of 2008-09.  But catch up doesn't happen overnight.  Short sales and foreclosures will continue to be a part of the market mix for several years to come, and certain buyers will be drawn to them for either "patience equity" or investors looking to rehab and sell.  Equity, or standard sales, will continue to rule the qualified buyer who can afford to pay market rate for a turnkey property.

ORANGE COUNTY JOBLESS RATE AT 2 YEAR LOW

Sometimes people want good news so badly, that they massage the numbers to get what they want.  This is not the case with this month's job report.  The unemployment rate fairly plunged from 9.1% to 8.6%.  When dealing with such big numbers, this half a point drop surely signifies a lot of jobs.  The national outlook has been equally positive with large orders up for most companies and jobs being offered are of a substantial nature, i.e., not just service industries. Leisure and hospitality added jobs, as did professional and business services.  Manufacturing was fairly flat with a loss of 800 jobs.  Look to see jobs continue to make certain inroads as 2011 continues.

CALIFORNIA HOME SALES AND PRICES FALL IN APRIL, BUT BOUNCE UP IN MAY

There is no doubt in anyone's mind, who works in real estate full time, that 2011 has had an uneven edge to it.  One month sales seem solid, the next, it sputters.  The real culprit in this is not affordability; it's at an all time high.  It's not selection, there is ample inventory, and it's not a lack of qualified buyers or motivated sellers.  The real culprit is the impression that the media has given as to the availability of money.  Many people think it's tighter than ever.  Getting a loan is difficult.  Actually, that's not true.  So if you are a buyer who has been staying away because you think you can't get a loan unless you have a 740 FICO and 20% down, go start looking for your dream home, because that's not the truth.  Do you have to be qualified?  Yes.  Do you have to have a job?   Yes.  Can you get a stated income loan?  No.  Can you get a fully documented FHA, VA, or Conventional loan?  YES!!

FINALLY, A NOTE ON MORTGAGE DEBT AND SHORT SALES

There was a great article in USA Today that reported that mortgage debt is falling at a record pace.  Attributed to low interest, mainly, and also refinancing, and frankly, defaults, have freed up more than $100 billion.  To put this in perspective-- it's comparable to all unemployment benefits for one year or this year's Social Security payroll tax cut.  Nicolas Carroll, a journalist on consumer finance had this to say, "This is a form of economic stimulus that goes to Main Street rather than Wall Street."  Homeowners have trimmed interest payments alone by 11% -- or $67 billion a year.  Remember what was said earlier about getting a loan.  This includes refinancing to better your interest rate or your terms.  You could qualify.  A final note on short sales.  They should be called long sales, on that we can all agree.  The banks are very fussy and make buyers and the sellers go to great lengths to successfully close these transactions.  Often times you are dealing with a second and third lender who must also agree to the terms of the sale and make requests for partial payment.  They are the most difficult of the 3 types of sales mentioned in the "numbers" paragraph.  Do your homework, do everything the lender asks, and make sure you have help.  Maybe a lot of help... See you next month.